CREW Project

Research Findings of Diagnostic Country Report (DCR), Ghana

Bus Transport Sector

INTRODUCTIONStudy objective:To draw policy makers’ attention towards competition by establishenormity of adverse policy reform impact on producer and Consumer welfare; and demonstrating possible welfare gain from suggested policy reforms in two sectors in Ghana, ie maize and Transport.

Policy Reforms Studied in the Transport Sector in Ghana

i. Policy Reform on Subsidised public transport - Metro Mass Transit (MMT)

ii. Policy Reform on Promotion of Private Sector Investment in Transport sector

iii. Policy Reform on Routing (Route Rationalisation

iv. Bus Safety Regulation

INTRODUCTION OF MASS TRANSPORTATION IN URBAN AREAS (MMT)

Policy Goal: Provide mass transit for 80% passengers to conserve road space with affordable prices to the poor.

Market Benefit: Instigate competitive fares with subsidy through competition with private operators to generate extended demand.

Status: Fleet operation capacity range between 81.3 and 54.4 percent at an average of 63.9 percent per annum.

Description 2006 2009 2012Average fleet held 586 1103 1,049% Change of operational fleet capacity 61.3 56.0 77.1

Passenger carried (M) 55 30 38

INTRODUCTION OF MASS TRANSPORTATION IN URBAN AREAS (MMT)

Impacts: o There is about 90% passenger preference for its useo Fares are 40% Cheaper.o It offers a wider scope of service in terms of route variationo Despite the growth in fleet size, the operational size of the fleet has

been under capacity. Challenges : The operation is not able to break even; It has

poor vehicle maintenance regimes due to price regulation. Other challenges include fare leakages.

Competition Concern: Operations of the MMT does not offer any barriers to its private competitors since the threshold of market controlled by its operation is low at about 5 percent

Recommendations:

POLICY REFORM ON PROMOTION OF PRIVATE SECTOR INVESTMENT IN TRANSPORT SECTOR

89 % of the private operators indicated that it is difficult to generate own resources towards the procurement of buses

Loan schemes have stopped due to high default rate attributed to higher interest rates.

Challenges: High payment default rate which has caused some leasing companies

to stop the offer. High bank rates The lack of such regulatory oversight makes such arrangements

unviable, in spite of its seemingly operational advantages.

INTRODUCTION OF NEW REGULATIONS AND STANDARDS ON ROAD SAFETY IN THE SECTORS

Policy Goal: To undertake nationwide road safety planning education, advocacy and resource mobilization for interventions.

Market Benefit: Reduce road traffic deaths in the country from an annual average of 1,600 to less than 1,000 and to achieve a single digit fatality rate by the year 2015.

Status: Introduction of Motor Vehicle Act; Road Traffic Act 683 of 2004, and Road Traffic Act 761 of 2008 etc on regulation of vehicles licensing, police traffic control, overcrowding; use of seatbelts

INTRODUCTION OF NEW REGULATIONS AND STANDARDS ON ROAD SAFETY IN THE SECTORS

Impactso 100 percent of bus operators and 36% of passengers said

there has been changes in RTC due to Government.o 36% of the passengers indicated positive changes in bus

transport safety while 28% indicated negative changeso There are new traffic safety standards including ensuring

regular checks on tyre condition, adherence to general vehicle standards, driver training in defensive driving, control of fatigue driving, alcohol checks, speed control etc.

Challenges: There is limited capacity for safety enforcement Competition Concern: The reform initiative has not created

the level of competitive efficiency of bus service safety as required

RECOMMENDATIONS• MMT service has potential to help the poor but it needs to

improve in terms of efficiency and also expansion and strategically expanding to poorly serviced ( not serviced) by the private sector operators to create a ‘niche’ market.

• Incentives/schemes such as (low-interest rate loans) should be introduced to promote potential private sector bus financing

• Establishment of the Road Transport Authority and implementation to oversee transport regulation and strict enforcement of transport regulations and quality standards in Ghana